Bank General Counsel Admitted to Embezzling $7.4 Million From Banks – Fraud Friday

December 27, 2024

Delaney Sexton
Contributing Editor

Bank General Counsel Admitted to Embezzling $7.4 Million From Banks – Fraud Friday

After a decade-long embezzlement scheme, James Blose decided to waive his right to be indicted and pled guilty to fraud. From 2013 to January 2022, James Blose served as General Counsel and held high-ranking positions at Hudson Valley Bank and Sterling Bank. Then from January 2022 to February 2023, Blose served as the EVP and General Counsel and Corporate Secretary at Webster Bank after it acquired Sterling National Bank.

Blose managed to operate his scheme from 2013 until Webster Bank terminated him in February 2023. There were multiple facets to his crimes against the bank. In some commercial loan transactions where the bank was the lender, Blose would retain portions of the closing fees and expenses that were due to the bank for himself, which included legal fees.

Then, in real estate transactions where the bank was the seller, Blose used an account to receive money from the purchasers. He disbursed some of the proceeds to the bank and other third parties for legitimate expenses, but he also retained portions of the proceeds that should have gone to the bank. Like the commercial loan transactions, he included legal and similar fees in the transaction but diverted the proceeds to himself or a third party for his benefit.

To conceal his fraud, he would falsify the bank’s copy of the closing statement to hide the funds he stole:

As one example, Blose falsely listed certain credits to the purchaser on the bank’s copy of the closing statement which reduced the amount the bank believed that it was owed.
He also falsely inflated and/or falsified certain third-party expenses in the bank’s closing statement so that he could keep the difference between what was paid to the third party and what was reported to the bank.
Blose falsely reported certain deal-related expenses such as title transfer fees, UCC filing fees, and local taxes on the bank’s closing statement as being owed by the bank. In actuality, the purchaser covered those expenses, and Blose was able to take those amounts for himself.

Throughout the fraud, Blose used his attorney trust accounts to make personal expenditures and to transfer funds to accounts under the names of business entities that he created and controlled. From there, he used the funds for his personal benefit. Over the course of the decade, he stole $7.4 million from his employers.

James Blose pled guilty to one count of bank fraud and one count of engaging in illegal monetary transactions. He is released on a $250,000 bond pending his sentencing scheduled for March 13^th.

Sources:
U.S. Attorney’s Office Press Release
James Blose Information